Final Step to Streamline Portfolio and Become
the Leading Cross-Platform Global Game Company
Facilitates Path to Further De-Lever and
Achieve Targeted Net Debt Leverage Ratio(1) Range of 2.5x to
3.5x
Simplifies Path to Close and Modifies
Valuation
Generates Approximately $5.6 billion in Total
Net After-Tax Proceeds from the Sale of Lottery and OpenBet
Businesses
Light & Wonder, Inc. (NASDAQ: LNW), formerly known as
Scientific Games Corporation (“Light & Wonder” or the
“Company”), today announced that it has entered into an amendment
to its definitive purchase agreement with Endeavor Operating
Company, LLC and Endeavor Group Holdings, Inc. (NYSE: EDR)
(collectively, “Endeavor”), a global sports and entertainment
company, related to the sale of its Sports Betting business,
OpenBet.
Under the terms of the amended purchase agreement, Light &
Wonder will receive $750 million in cash and $50 million in Class A
common stock of Endeavor Group Holdings, Inc., based on the volume
weighted average price of such stock in the twenty days before the
date of the amendment, or total gross proceeds of $800 million and
estimated total net after-tax proceeds of approximately $700
million. The amended purchase agreement provides a strong valuation
in the current market and also increases the speed and certainty of
closing by modifying the conditions for closing, including
Endeavor’s agreement to waive the closing condition requiring
regulatory approval by the Nevada Gaming Control Board, if
required. Under the revised terms, the transaction is anticipated
to close by the end of the third quarter of 2022, subject to the
remaining applicable regulatory approvals and customary closing
conditions. The recently completed Lottery sale and the pending
sale of OpenBet will cumulatively generate approximately $5.6
billion of estimated net after-tax proceeds.
“Endeavor is the right partner for OpenBet and the amended
agreement increases speed and certainty by creating a simplified
path to closing the transaction, while unlocking substantial
benefits for OpenBet and Light & Wonder,” said Barry Cottle,
President and Chief Executive Officer of Light & Wonder.
“OpenBet demonstrates continued momentum across their key markets
and the amended terms of the transaction provide strong value for
the business. The significant cash consideration from the OpenBet
sale will enable us to further de-lever our balance sheet and
achieve our Targeted Net Debt Leverage Ratio (1) range of 2.5x to
3.5x.”
“This transaction is the final step in our journey to streamline
our organization as we deliver on our promises as the leading
cross-platform global game company. The cumulative proceeds from
our divestitures, as well as our double digit growth profile and
$1.4 billion 2025 Targeted Consolidated AEBITDA(1) resulting in
strong cash flow generation, is expected to create tremendous value
for our shareholders. Our enhanced financial flexibility will
enable us to accelerate the return of significant capital to
shareholders through our share repurchase program, while also
investing in key growth initiatives.”
OpenBet is one of the world's leading global online sports
betting technology companies, offering an ecosystem of sports
content, technology and services to the largest operators around
the world. It is a leading business-to-business sports betting
partner in the U.S., U.K., Australia and Canada, with a strong
position in Europe and APAC. To date, OpenBet has over 75 global
customers, including 46 sports books across 12 states and a 100%
uptime record across major sporting events.
__________________ (1) Represents a non-GAAP financial measure.
Additional information on this non-GAAP financial measure is
available at the end of this release.
About Light & Wonder, Inc.
Light & Wonder, Inc. (formerly known as Scientific Games
Corporation), is the global leader in cross-platform games and
entertainment. The Company brings together 5,000 employees from six
continents to connect content between land-based and digital
channels with unmatched technology and distribution. Guided by a
culture that values daring teamwork and creativity, the Company
builds new worlds of play, developing game experiences loved by
players around the globe. Its OpenGaming™ platform powers the
largest digital-gaming network in the industry. The Company is
committed to the highest standards of integrity, from promoting
player responsibility to implementing sustainable practices. To
learn more, visit lnw.com.
Forward-Looking Statements
In this press release, Light & Wonder makes “forward-looking
statements” within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements can be
identified by words such as “will,” “may,” and “should.” These
statements are based upon Light & Wonder’s management’s current
expectations, assumptions and estimates regarding the amendment
between Light & Wonder and Endeavor, the expected benefits of
the amendment, the expected timing of completion of the proposed
transaction as amended and anticipated future financial and
operating performance and results. Forward-looking statements are
not guarantees of timing, future results or performance. Therefore,
you should not rely on any of these forward-looking statements as
predictions of future events. Actual results may differ materially
from those contemplated in these statements due to a variety of
risks, uncertainties and other factors, including (i) the risk that
the conditions to the closing of the proposed transaction as
amended may not be satisfied, (ii) the risk that a material adverse
change, event or occurrence may affect Light & Wonder and
Endeavor prior to the closing of the proposed transaction as
amended and may delay the proposed transaction as amended or cause
the companies to abandon the proposed transaction as amended, (iii)
the possibility that the amendment may involve unexpected costs,
liabilities or delays, (iv) the risk that the businesses of the
companies may suffer as a result of uncertainty surrounding the
amendment and (v) the risk that disruptions from the amendment will
harm relationships with customers, employees and suppliers or (vi)
that Light & Wonder may be unable to achieve expected
financial, operational and strategic benefits of the amendment, and
those factors described in Light & Wonder’s filings with the
Securities and Exchange Commission (the “SEC”), including Light
& Wonder’s current reports on Form 8-K, quarterly reports on
Form 10-Q and its latest annual report on Form 10-K filed with the
SEC on March 1, 2022 (including under the headings “Forward-Looking
Statements” and “Risk Factors”). Forward-looking statements speak
only as of the date they are made and, except for Light &
Wonder’s ongoing obligations under the U.S. federal securities
laws, Light & Wonder undertakes no obligation to publicly
update any forward-looking statements whether as a result of new
information, future events or otherwise.
Non-GAAP Financial Measures
Targeted Net Debt Leverage Ratio
Net debt is defined as total principal face value of debt
outstanding, the most directly comparable GAAP measure, less cash
and cash equivalents. Principal face value of debt outstanding
includes the face value of debt issued under Senior Secured Credit
Facilities, Senior Notes and Subordinated Notes, which are all
described in Note 15 of the Company's Annual Report on Form 10-K
for the year ended December 31, 2021 and in Note 11 of the
Company’s Quarterly Report on Form 10-Q for the quarter ended March
31, 2022, but it does not include other long term obligations of $3
million primarily comprised of certain revenue transactions
presented as debt in accordance with ASC 470. Net debt leverage
ratio, represents Net debt divided by Combined AEBITDA (as defined
below) (or Consolidated AEBITDA for future periods after the
disposition of discontinued operations). The forward-looking
non-GAAP financial measure targeted net debt leverage ratio is
presented on a supplemental basis and does not reflect Company
guidance. We are not providing a forward-looking quantitative
reconciliation of targeted net debt leverage ratio to the most
directly comparable GAAP measure because we are unable to predict
with reasonable certainty the ultimate outcome of certain
significant items without unreasonable effort. These items are
uncertain, depend on various factors, and could have a material
impact on GAAP reported results for the relevant period.
Targeted Consolidated AEBITDA
Consolidated AEBITDA, is a non-GAAP financial measure that is
presented as a supplemental disclosure of the Company’s continuing
operations. Consolidated AEBITDA should not be considered in
isolation of, as a substitute for, or superior to, the consolidated
financial information prepared in accordance with GAAP, and should
be read in conjunction with the Company's financial statements
filed with the SEC. Consolidated AEBITDA may differ from similarly
titled measures presented by other companies. Consolidated AEBITDA
is reconciled to Net income (loss) attributable to the Company and
includes the following adjustments: (1) Net income attributable to
noncontrolling interest; (2) Net income from discontinued
operations, net of tax; (3) Restructuring and other, which includes
charges or expenses attributable to: (i) employee severance; (ii)
management restructuring and related costs; (iii) restructuring and
integration; (iv) cost savings initiatives; (v) major litigation;
and (vi) acquisition costs and other unusual items; (4)
Depreciation amortization and impairment charges and Goodwill
impairments; (5) change in fair value of investments and Gain on
remeasurement of debt; (6) Interest expense; (7) Income tax expense
(benefit); (8) Stock-based compensation; and (9) Other income, net
including foreign currency (gains) and losses, and earnings from
equity investments. The forward-looking non-GAAP financial measure
Targeted Consolidated AEBITDA represents a goal for the Company and
does not reflect Company guidance. We are not providing a
forward-looking quantitative reconciliation of Targeted
Consolidated AEBITDA to the most directly comparable GAAP measure
because we are unable to do so without unreasonable efforts or to
reasonably estimate the projected outcome of certain significant
items. These items are uncertain, depend on various factors out of
our control and could have a material impact on the corresponding
measures calculated in accordance with GAAP.
Combined AEBITDA
Combined AEBITDA, is a non-GAAP financial measure that combines
Consolidated AEBITDA (representing our continuing operations),
AEBITDA from discontinued operations and EBITDA from equity
investments included in continuing operations and is presented as a
supplemental disclosure. Combined AEBITDA should not be considered
in isolation of, as a substitute for, or superior to, the
consolidated financial information prepared in accordance with
GAAP, and should be read in conjunction with the Company's
financial statements filed with the SEC. Combined AEBITDA may
differ from similarly titled measures presented by other
companies.
AEBITDA from Discontinued Operations
AEBITDA from discontinued operations, is a non-GAAP financial
measure that is presented as a supplemental disclosure for the
Company’s discontinued operations. AEBITDA from discontinued
operations should not be considered in isolation of, as a
substitute for, or superior to, the consolidated financial
information prepared in accordance with GAAP, and should be read in
conjunction with the Company's financial statements filed with the
SEC. AEBITDA from discontinued operations may differ from similarly
titled measures presented by other companies. AEBITDA from
discontinued operations is reconciled to Net income from
discontinued operations, net of tax and includes the following
adjustments: (1) Restructuring and other, which includes charges or
expenses attributable to: (i) employee severance; (ii) management
restructuring and related costs; (iii) restructuring and
integration; (iv) cost savings initiatives; (v) major litigation;
and (vi) acquisition costs and other unusual items; (2)
Depreciation, amortization and impairment charges and Goodwill
impairments; (3) Income tax expense; and (4) Stock-based
compensation and other, net. In addition to the preceding
adjustments, we exclude Earnings from equity investments and add
(without duplication) discontinued operations pro rata share of
EBITDA from equity investments, which represents their share of
earnings (whether or not distributed) before income tax expense,
depreciation and amortization expense, and interest expense, net of
our joint ventures and minority investees, which is included in our
calculation of AEBITDA from discontinued operations.
EBITDA from Equity Investments
EBITDA from equity investments, represents our share of earnings
(loss) (whether or not distributed to us) plus income tax expense,
depreciation and amortization expense (inclusive of amortization of
payments made to customers for LNS), interest (income) expense,
net, and other non-cash and unusual items from our joint ventures
and minority investees. EBITDA from equity investments is a
non-GAAP financial measure that is presented as supplemental
disclosure for illustrative purposes only.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220630005862/en/
Investor Inquiries Jim Bombassei, Senior Vice President
of Investor Relations jbombassei@lnw.com
Media Inquiries Nick Lamplough / T.J. O'Sullivan / Lucas
Pers, Joele Frank, Wilkinson Brimmer Katcher, +1 212 355 4449
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